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Sale of Business in S corp

Jimbojr
Level 1

SCorp has two remaining members. One Old member that had in the buy out that he would get X amount if the business was sold.

Is  the amount that was paid a cost of Sale, or a distribution  of dividend?

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3 Replies 3
qbteachmt
Level 15

"Is the amount that was paid a cost of Sale, or a distribution of dividend?"

There is never Dividend for S corp and this is not a Cost of Sales.

And it matters if this is Entity sale, or Assets/Liability, or only that one "old member" is selling? And his Basis, compared to "X" amount? Who is this sold to; another shareholder?

Have you worked on business sales in the past, or is this your first?

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"Level Up" is a gaming function, not a real life function.
Terry53029
Level 11
Level 11

An interesting article for you to read in tax easy terms. You may want to get a mentor on this one.

 https://www.fool.com/knowledge-center/tax-treatment-of-selling-a-subchapter-s-corporatio.aspx

Jimbojr
Level 1

Thanks 

 Ultimately I issued a form 8594  to notify the  seller of the purchase price.

A good stickey wicket

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